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Simple Career Advice for Everyone

A Never Ending Interpretation of Elasticity

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Energy Elasticity
Formula: Energy Growth / Economic Growth

Definition 1 Environment: Percentage change in energy consumption to achieve one percent change in GDP
Example: India, 8% Econ growth, 4% Energy growth: Energy Elasticity: 0.5
Interpretation: This is as expected, we are sustainable, our economy grow but our energy usage is low

Definition 2 Economy: Percentage change in GDP to achieve certain change in energy consumption growth
Example: China, 10% Econ growth, 15% Energy growth: Energy Elasticity: 1.5
Interpretation: This is as expected, we are growing our economy

Definition 3 Politics:
Example: Indonesia, 6% Econ growth, 4% Energy growth: Energy elasticity: 1.5

When someone knows that economy getting bad (e.g 4%)

Interpretation A: This is good, our elasticity is 1 now, our energy is efficient. Moreover, this energy growth will affecting the future economy growth.

Interpretation B: This is good, our energy development is still growing.

Interpretation C: This is bad, is not efficient, we expecting to get <1 elasticity

Infrastructure Elasticity
Well, the same argument might be use from Infrastructure point of view. That infrastructure development will help economic growth.

Written by Anjar Priandoyo

Februari 9, 2016 pada 11:27 am

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